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Centurion Asset Management Inc. announces the Internalization of the Property and Asset Management of Centurion Apartment REIT and Centurion Real Estate Opportunities Trust

December 11, 2014

Centurion Asset Management Inc. announces the Internalization of the Property...

Centurion Asset Management Inc. (“CAMI”) is pleased to announce that it has reached an agreement with Centurion Apartment REIT (“REIT”) and Centurion Real Estate Opportunities Trust (“CREOT”) to internalize their respective property and asset management teams.   Some of the material terms of the transaction are:

  • The ownership of Centurion Property Associates Inc., the property manager of the REIT will be transferred to the REIT, which will assume its assets and liabilities, including its staff. The REIT will not pay any fee or premium to the asset manager for the transfer.
  • As a result of the internalization, the REIT and CREOT will share certain office, overhead, staffing and other costs that were previously incurred by Centurion Property Associates Inc. and Centurion Asset Management Inc.
  • As the REIT and CREOT will no longer pay property or asset management fees, it is anticipated that there will be substantial cost savings and that these savings will increase further as the REIT and CREOT continue to grow. The REIT and CREOT will have access to all the resources they currently have but will only pay their respective share of current and future expenses.
  • The rights to “The MARQ”, Centurion’s student housing brand will transfer to the REIT. The REIT will have the opportunity to earn management fees on third party management of student properties.
  • Greg Romundt will continue to work for the REIT and CREOT in his current role as President and Trustee. CAMI will retain its Class “M” Trust Units which will also become exchangeable at the option of CAMI for any sub funds of the REIT (currently only Class “R” Units the Centurion Real Estate Opportunities Trust) or CREOT. The asset management contract will be extended until December 31, 2024, providing the REIT and CREOT with the committed continuing services of CAMI and its team, including Greg Romundt.
  • The proposal was prepared on the suggestion of Greg Romundt and approved by the independent trustees of both the REIT and CREOT. Wayne Tuck and Greg Romundt, as members of the REIT management team, recused themselves during the meeting of the REIT’s independent trustees during their deliberations and abstained from voting on the motion to accept the proposal. Wayne Tuck, Greg Romundt and Stephen Stewart, as members of the CREOT management team abstained from the vote by CREOT’s independent trustees on the motion to accept the proposal.

Commenting on the transaction, Greg Romundt, President of the REIT, CREOT and Centurion Asset Management Inc stated:

“Over the years that I’ve been building this business, I’ve consistently tried to find ways to cut costs and drive returns. As we have grown over the years and we’ve achieved increased economies of scale, we’ve consistently been able to pass on some of these savings by cutting asset and property management fees. This transaction represents the next stage in that process and in our evolution. With assets soon approaching $700 million, the REIT is at a scale where it makes sense to internalize many of the functions currently provided by the asset and property manager, and there are significant savings in doing so. While the REIT isn’t public, and there is no plan to be so, we’ve always tried to manage the REIT in a manner consistent with best practices and with an eye for what’s best for the REIT and our investors. For CREOT, while we have only just made this fund available to investors, extending these savings to CREOT as part of this evolutionary process made tremendous sense and in my opinion further distinguishes CREOT’s uniqueness in the marketplace. I love what I do and the team and I remain committed to continuing to build the REIT and CREOT well into the future.”

The asset manager, the REIT and CREOT are in the process of preparing a formal agreement for this process. The internalization is expected to take effect on or about January 1, 2015 and will be immediately accretive to both the REIT and CREOT.